With an external DAC of course ... either by USB, lightning, wifi, bluetooth
For someone so opinionated about this topic, with strong views, it does seem like you dont understand the technology all that well? Just as a computer would do with a USB DAC, or soundcard/recording interface, the transport/client asks for a service and depending on your settings in the OS, and audio layer/drivers, suitable, present and preferred hardware will respond to that need, advertise its capabilities and a connection is established. then a series of buffers, and -> DAC.
It is bypassed, because that is what you have told it to do in your settings. a device with superior spec and capability that the internal dac (*if present) is unable to provide is connected. That might be sample rate, file type, or other technical preference, even hardware EQ and additionally better headphone amplification if a headphone amp is also integrated.
Some phones are even USBC only, no headphone output and USBC does not have a way of connecting legacy analogue devices like most previous docking connectors do. there is no point to have an internal DAC in your phone then, so of course there is none. You must—at that point—use an external dac.
*Dongle, bluetooth headsets, wifi, or USB devices will take over what is typically a PCM to analogue conversion—when talking phones—but DoP is possible, perhaps even native DSD. I'm unaware of any DAPs or phones that truly process DSD natively, perhaps one of the high end AKM dacs, but most will convert to PCM, or a hybrid sort of multibit DSD internally. If any form of digital volume control or processing is done, it will be with more than 1bit, so you would require an analogue volume control, or a digitally controlled analogue volume control, or convert to multibit, perform volume control, then back to 1bit PWM.
But I digress ... the number of phones that have dedicated dacs is fairly small these days. Some phones will have some sort of hardware codec built into the SoC. Cirrus and ESS chips dominate the dedicated mobile dac and audio SoC market, but if you dont have an analogue connection to the external world, you dont need a DAC. you are relying on your customer using wireless, or a dongle dac, the most elementary—like the tiny apple headphone adapter—has a dac inside.